SBI posts record quarterly profit as bad loan provisions drop

State Bank of India (SBI) on Friday reported its biggest ever quarterly profit on lower bad loan provisions and better asset quality, sending its shares up over 3%.

Net profit jumped to 55.83 billion rupees ($785.56 million) in the three months to Dec. 31, from 39.55 billion rupees a year earlier. That missed analysts' estimates for a profit of 63.34 billion rupees, according to Refinitiv data, due to a higher tax expense.

Provisions for bad loans dropped 41.4%, while gross bad loans as a percentage of total loans, a measure of asset quality, slipped to 6.94% at December-end from 7.19% in the immediately previous quarter, the Mumbai-based bank said in a regulatory filing.

SBI's shares rose as much as 3.5% in a Mumbai market that was trading 0.1% lower as of 0830 GMT.

Quarterly net interest income rose 22.42%, while net interest margin, a key indicator of a bank's profitability, rose to 3.59%, up 37 basis points from the previous quarter.

Slippages, or fresh addition of bad loans, surged to 165.25 billion rupees from 88.05 billion rupees in the previous quarter, due to a 70 billion rupee exposure to a large housing finance company, SBI said.